Saturday, April 20, 2019

Blockchain, Cryptocurrency and Africa by Diya Wang (Georgetown University) and Zhiqiang Qing (University of Maryland), Interns



The Blockchain, Cryptocurrency and Africa panel discussion was hosted on April 10th at the African Union Representational Mission, Washington D.C. The discussion aimed to introduce blockchain and cryptocurrency to the Diaspora and African delegates in town for the Spring Meetings of the World Bank and the IMF. During the discussion, issues including defining what is blockchain and cryptocurrency, how blockchain changes the nature of money, a forecast of the development of blockchain and cryptocurrency in Africa, the impact of government regulations, current barriers to the use of these technologies and many other issues were brought up.

Cryptocurrency is internet-based money not bound by geography; transactions are stored in a database called a blockchain, a group of connected computers that record transactions in a ledger in real time. Many experts say the conditions on the African continent are great for cryptocurrency. Interest in cryptocurrency in Africa keeps increasing despite the medium’s controversy.  One of the main reasons that Africa is turning to cryptocurrency is to fight high inflation. For example, when Zimbabwe’s inflation skyrocketed in 2015, some Zimbabweans turned to Bitcoin.  Also, the large increase in mobile technologies usage in Africa has supported the development of cryptocurrency. According to the GSM Association, there will be 725 million mobile phone subscribers in Africa by 2020, which enables more Africans to have the tools to plug into the cryptocurrency ecosystem.

Before the discussion, we were interested in this topic but were unfamiliar with the status of blockchain and cryptocurrency in Africa. We were surprised to learn how enthusiastic many on the continent are toward this new technology, as evident during the discussion. It was also interesting to learn about some of the limitations, the double spending problem, for example, in the process of developing such innovations. We also learned a lot about the emerging markets’ perspective toward some controversial financial instruments. 

Today, our world is welcoming another transformational stage, where technology and innovation are reshaping the whole society. Blockchain and cryptocurrency are leading technologies that have the power to reshape the world. As William Michael Cunningham, CEO of Creative Investment Research, commented at the conclusion of the event, “The functionality of cryptocurrency is superior to that of paper money. Eventually, cryptocurrency is going to dominate.”

Thursday, April 18, 2019

New Opportunity Zone Guidance

April 17th saw the release of a second set of guidance for the “Opportunity Zone” (OZ) program. As we noted in testimony to the IRS on February 14th, we remain concerned that the OZ program diverts needed tax revenue from public purposes and places this revenue in the hands of a mainly wealthy and white demographic unrepresentative of the US population as a whole. As the Hill Newspaper noted, the program has "drawn criticism from those who argue it will primarily benefit wealthy investors rather than residents of low-income neighborhoods." Today's regs do nothing to change this concern.

The regs released today benefit Opportunity Zone Funds (as opposed to residents). These funds are the financial vehicle used to make investments in Opportunity Zone areas. Today's regs are "designed to make it easier for funds to ensure that they are complying with a requirement that they have 90 percent of their assets invested in opportunity zones." In other words, the focus of IRS activity remains on investors, not community residents (despite the fact that all US citizens contribute to and pay for the IRS, not just wealthy and white real estate interests.)

Other points include:
  • Opportunity Zone "Funds will get additional leeway to invest capital on a more flexible timeline"
  • Opportunity Zone "Funds will have a 1 year grace period to sell assets and reinvest the proceeds, thus avoiding penalties intended to prevent funds from sitting on the cash."
  • Opportunity Zone "Funds will have more flexibility to include more than one investment in a fund. Investors will get special tax treatment if they’ve held their stake in the fund for at least 10 years, even if the fund didn’t own the asset for a full decade."
  • The requirement that OZ businesses generate at least half their gross income within their opportunity zone has been dropped. Now, "Treasury will allow businesses to qualify if at least 50 percent of the hours the employees work are within the zone, as long as it performs at least half of the its services within the area, or if there are significant management and operational functions present."
  • There is "no penalty if an investor dies and passes an interest in an OZ Fund to their heirs." Working capital "can be used for development of an operating business, not just a real estate project."
  • OZ Funds don't "have to take assets into account for purposes of the requirement unless the assets have been in the fund for at least six months. They also provide that if a fund sells an asset, it has up to 12 months to reinvest in a new appropriate investment."
In a nod to criticisms we and others leveled at the program on February 14th, Treasury requested "comments about how to best measure the economic impact taking place in the opportunity zones." During my testimony, I proposed two OZ program improvements: 1) I recommended regulations that would prohibit the President, senators, congressmen, and state governors from personally benefiting from the program; and 2) I suggested using the Ethereum blockchain to track and report Opportunity Zone investment social impact.

Looks like one of those suggestions got thru.

Note: there will be a hearing on these regs on July 9, 2019 at the New Carrollton Federal Building at 5000 Ellin Road in Lanham, Maryland 20706.

We'll be sure to raise these issues.

Tuesday, April 9, 2019

List of Black Women who work for venture capitalists

The following lists some of the Black women working for VC firms. While we think this is a good sign, remember - the problem is with the VC model itself, not with the color or gender of the people who populate the firms. You're still not going to be able to get money from these firms unless you fit the demographic they prefer. See: Small Business Financing, Black People and Venture Capital

Black Woman VCs (click on their name to be taken to their Crunchbase profile...or look them up on LinkedIn.)

Jacqueline Grant
Principal, Abingworth

Karen Kerr
Executive Managing Director
GE Ventures

Nicole Walker
Partner, Venture Capital – Healthcare
Baird Capital

Candice Matthews
Co-Founder and Executive Director
Hillman Accelerator

Tracy Gray
Founder and Managing Partner
The 22 Fund

Abyah Wynn
Co-founder and Managing Director
Twenty65 Fund

Monique Idlett-Mosley
Managing Partner
Reign Ventures

Erica Duignan Minnihan
Founding Partner
1000 Angels and Reign Ventures

Nicole Sanchez
Investment Partner at XFactor Ventures

Diane Henry
Technology Angel Investor
Rogue Capital Collective

Lorine Pendleton
New York Chair, TIGER 21
Investment Partner - Portfolia

Ita Ekpoudom
Partner
GingerBread Capital

Jillian Williams
Investment Principal
Anthemis Group

Mariah Lichtenstern
Founding Partner and Managing Director
DiverseCity Ventures

Monique Woodard
Early Stage Investor

Hadiyah Mujhid
CEO and Founder
HBCUvc

Shauntel (Poulson) Garvey
General Partner
Reach Capital

Sydney Sykes
Co-Founder, Co-Chair
BLCK VC

Adina Tecklu
Venture Investor
Canaan Partners

Uriridiakoghene (Ulili) Onovakpuri
Partner
Kapor Capital

Sydney Thomas
Senior Associate
Precursor Ventures

Friday, April 5, 2019

How to Finance a Black Women-owned Business in 2019

Following our successful 2018 webinar, we are pleased to announce the launch of our latest online class, "How to Finance a Black Women-owned Business in 2019."

The class is hosted on Udemy, "the leading global marketplace for teaching and learning. Udemy helps organizations of all kinds prepare for the ever-evolving future of work." Their "curated collection of top-rated business and technical courses gives startups, companies, governments, and nonprofits the power to satisfy entrepreneurs' hunger for learning and development."

Our efforts are a fresh approach to providing targeted, up-to-date information in this space. Black women have continued down this path of entrepreneurship. According to one report, "the number of businesses created by black women in the United States alone is up more than 460% over the last 20 years, making them the fastest growing group of entrepreneurs in the nation."

Of course, we've known this for some time, and have the track record to prove it. We launched MinorityFinance.com (http://www.minorityfinance.com/about-us.html) in 1998 and noted that 65% of the inquiries from the site came from Black women. The key issue then, and now, is money: "according to the Diane Project, black female founders are only able to raise an average of $36,000 in venture funding, while start-ups owned mostly by white males have received on average $1.3 million." We will provide data-based advice and instruction, based on our years of experience, to help you over this hurdle.

AGENDA

• Business Planning
• Your business credit history: Dun and Bradstreet.
• Data and Resources for Black women businesses
• The best non profit, local/state/
federal resources
• Steps in the business financing process
• Protecting your ideas: intellectual property rights
• What type of financing products and sources/investors/lenders are best for your business: banks, credit unions, factors, hard money lenders, crowdfunding, credit cards, venture capital, digital currency, ICOs.
• Why you should seek out venture capital these days. Which ones to go to. How you should approach them.

The feedback from the our 2018 webinar, titled "How to Finance a Black Women-owned Business in 2018" held on July 18th, August 10th and August 24th, was uniformly positive. Eighty five percent (85%) of the respondents to our customer satisfaction survey found the webinar useful. Seventy one percent (71%) rated the webinar excellent.

To enroll in our class, log onto: https://www.udemy.com/blackwomenbusinessfinancing/